--Scorecard Banks Following Through On Bid to Expand Money Movement Functionality, With 16 Now Offering Transfers To and From Accounts at Other Banks

Keynote Competitive Research, the industry research division of Keynote(R) Systems (Nasdaq:KEYN), the global leader in on-demand mobile and Internet test & measurement solutions for continuously improving the online experience, today announced the Q4 2009 Banker Scorecard, the latest edition of the Banker Scorecard. Now in its 11th year and covering 25 large and regional banks over 320 of the most relevant criteria, the Scorecard remains the most authoritative study of customer experience best practices in online banking and sales.

Rather than applauding banks for every gee-whiz feature they roll out, the Scorecard starts with the premise that certain features and design elements help the online customer experience and other things don't help, and that some helpful features and design elements matter more than others. To arrive at the essential criteria, Keynote draws on an unparalleled number of live user tests of banks' public and online banking sites, interviews with privacy experts and usability professionals, market research data and proof points provided by financial services providers. Keynote is then able to cull out the things that don't matter to customers, even if they're bells and whistles that may win analyst awards or buzz. Keynote then focuses on the elements that do help customers, weighting each criterion according to its relevance to the online customer experience and sorting criteria into useful categories, such as Functionality and Ease of Use, and into critical tasks, such as Open Account or Get Service.

Bank of America repeats as winner for Overall score, expanding its lead on second place to 5 points on a scale of 100. Bank of America wins the Functionality, Ease of Use, Privacy & Security categories and the Look Up Information, Transact and Learn and Plan tasks.

Citibank wins for Quality and Availability, a category that covers such best practices as bill pay guarantees, the availability of customer support for online banking and Spanish-language online banking, where Citibank stands out with its Spanish-language banking offering. Citibank also wins the Open Accounts task. Chase wins the Get Service task on the basis of its support for a large variety of critical customer service items.

As Keynote has been conducting Scorecards about twice a year or more for over a decade, it has been able to spot and evaluate trends in online delivery as they emerge. Important trends Keynote spotted are now maturing: In money movement, most Scorecard banks (16 out of 25) are now offering the ability to move money between the bank and the customer's accounts at another bank -- more than the number of Scorecard banks that present third-party bills such as phone bills and electric bills within online banking. Keynote has also mapped the rise of mobile banking, noting that between SMS, WAP2 and thick-client mobile banking (each of which is tracked on the Scorecard), 16 of 25 Scorecard banks now offer transactional mobile banking.

"The Scorecard shows us which trends that have received publicity in the banking industry are in fact reaching customers. Banks are exposing customers to mobile banking and advanced money movement and these services are getting used," says Chris Musto, general manager, Keynote competitive research at Keynote Systems. "The best practice as banks roll out new features such as these is to not forget the many usability lessons the banks have learned over the years with more mature features. Some banks are remembering these lessons while others are making usability mistakes anew as they roll out new features."

The latest Scorecard evaluation period was eventful due to the high rate of site redesigns, notes Musto. "With five banks each rolling out significant redesigns that each show capabilities and usability touches not seen at the very largest banks, we can see how there aren't just a handful of banks moving the ball forward online, but rather many, and from across the country. And with these redesigns we see each bank playing to its brand and strengths with targeted innovations. We also see how banks are innovating past the classic tension between putting as much useful informational and transactional content up front and making online banking easy to use and understand."

The study is available for purchase from Keynote and comes with all scores and all answers for all banks with written analysis of each bank, along with access to prior Scorecards. To inquire about a Keynote Banker Scorecard subscription, please view: http://www.keynote.com/company/contact/request.html

About Keynote

Keynote Systems (NASDAQ:KEYN) is the global leader in on-demand test & measurement solutions for continuously improving the online experience. For over a decade, Keynote has been providing measurement data and testing capabilities that allow companies to understand and improve their customers' online and mobile experience. Keynote has four test and measurement businesses: Web performance, mobile quality, streaming & VoIP and customer experience/UX.

Known as The Mobile and Internet Performance Authority(TM), Keynote has a market-leading infrastructure of 3,000 measurement computers and mobile devices in over 240 locations around the world. Keynote's 2,800 customers represent top Internet and mobile companies including American Express, Disney, eBay, E*TRADE, Expedia, Microsoft, SonyEricsson, Sprint, T-Mobile, Verizon, Vodafone and YouTube.

Keynote Systems, Inc. is headquartered in San Mateo, California and can be reached at www.keynote.com or by phone in the U.S. at 1-800-KEYNOTE.

Keynote(R), DataPulse(R), CustomerScope(R), Keynote CE Rankings(R), Keynote Customer Experience Rankings(R), Perspective(R), Keynote Red Alert(R), Keynote Traffic Perspective(R), Keynote WebEffective(R), The Internet Performance Authority(R), MyKeynote(R) , SIGOS(R), SITE(R), Keynote(TM), The Mobile & Internet Performance Authority(TM), Screen Sensing Technology and Keynote FlexUse(TM) are trademarks or registered trademarks of Keynote Systems, Inc. in the United States and/or other countries. All other trademarks are the property of their respective owners. (C) 2009 Keynote Systems, Inc.

SOURCE: Keynote Systems

Keynote Systems, Inc. 
Dan Berkowitz, 650-403-3305 
dberkowitz@keynote.com

Conference Call

Keynote will host a conference call and simultaneous webcast to discuss its Fiscal Fourth Quarter and Year End 2009 earnings results at 2:00 pm (PST) today, November 9, 2009. To access the call in the U.S., please dial (866) 271-6228; international callers please dial (973) 638-3423, approximately 10 minutes prior to the start of the conference call. The webcast of the call will be available at the investor section of the company's web site at www.keynote.com.

The replay will be available after the call by telephone by dialing (800) 642-1687 in the U.S. and (706) 645-9291 internationally; the pass code is 33968522. The webcast is at the investor section of the company's web site at www.keynote.com.

Forward-Looking Statements

This press release contains forward-looking statements that are not purely historical regarding the Company or management's intentions, hopes, beliefs, expectations and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company's current expectations.

Forward-looking statements in this release include, but are not limited to, future dividends. It is important to note that actual outcomes and Keynote's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as the uncertain impact that the current global economic recession will have on Keynote's business or the businesses of current or potential customers, Keynote's ability to successfully market and sell its current services to new or existing customers, Keynote's ability to develop and introduce new services in a timely manner and customer acceptance of new services, the extent to which demand for Keynote's various services fluctuates and the extent to which revenue from other service lines can increase, the extent to which existing customers renew their subscriptions and purchase additional services, particularly enterprise customers, Keynote's ability to attract and retain new customers, Keynote's ability to operate SIGOS and its other international operations and manage related costs successfully, Keynote's ability to retain key employees, pricing pressure with respect to Keynote's services, Keynote's ability to increase sales of its other services, unforeseen expenses, competition in Keynote's markets, costs associated with any future acquisitions, the effect of acquisitions by competitors in Keynote's target markets, Keynote's ability to keep pace with changes in the mobile and Internet infrastructure as well as other technological changes, the impact of changes in foreign exchange rates, which can be significant, and the success of Keynote's international operations. Readers should also refer to the risks outlined in Keynote's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for its fiscal year ended September 30, 2008, and its quarterly reports on Form 10-Q and any current reports on Form 8-K filed during the fiscal year.

All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information available to Keynote as of the date of this press release, and Keynote assumes no obligation to update any such forward-looking statement or reasons why results might differ.

About Keynote

Keynote Systems (Nasdaq "KEYN") is the global leader in on-demand test & measurement solutions for continuously improving the online experience. For over a decade, Keynote has been providing measurement data and testing capabilities that allow companies to understand and improve their customers' online and mobile experience. Keynote has four test and measurement businesses: Web performance, mobile quality, streaming & VoIP, and customer experience/UX.

Known as The Mobile and Internet Performance Authority(TM), Keynote has a market-leading infrastructure of over 3,000 measurement computers and mobile devices in over 240 locations around the world. Keynote's 2,800 customers represent top Internet and mobile companies including American Express, Dell, Disney, eBay, E*TRADE, Expedia, Microsoft, SonyEricsson, Sprint, T-Mobile, Verizon, Vodafone and YouTube.

Keynote Systems, Inc. is headquartered in San Mateo, California and can be reached at www.keynote.com or by phone in the U.S. at 1-800-KEYNOTE.

Keynote, The Internet Performance Authority, Perspective and WebEffective are registered trademarks and The Mobile and Internet Performance Authority, True Experience and FlexUse are trademarks of Keynote Systems, Inc. Other trademarks are the property of their respective owners. (C) 2009 Keynote Systems, Inc.

SOURCE: Keynote Systems

Keynote Systems, Inc. 
Dan Berkowitz, 650-403-3305 (Public Relations) 
dberkowitz@keynote.com 
Kirsten Chapman, 415-433-3777 (Investor Relations) 
kchapman@lhai.com

"Smartphones are driving the mobile market and their ability to access real Web content is shaping the way we all work and play," said Vik Chaudhary, VP of product management and corporate development at Keynote. "These highly capable devices give users 24x7 Web access, wherever they are. Smartphones are now an extension of the online experience and have become the source of a significant and ever-increasing portion of Web traffic."

The integration of the WebKit browser engine into MAP 4.0 expands its mobile monitoring capability beyond simple WAP content and SMS. MAP 4.0 customers can now monitor full-featured HTML Web sites that contain JavaScript, Ajax, CSS, DHTML and other complex Web technologies.

WebKit is an open source Web browser engine, originally developed by Apple and integrated into Safari, now considered the de facto standard for smartphone Web browsing including for the Apple iPhone, the Google Android and MyTouch, Palm Pre, Nokia N95, BlackBerry Curve, Storm and Tour.

Keynote MAP 4.0 and the two connection options (MAP over Air and MAP over Network) are available immediately.

((Comments on this story may be sent to newsdesk@closeupmedia.com))

--Cash From Operations Increased to $1.4 Million for the Fourth Quarter 2009 and $8.8 Million for Fiscal 2009, Compared to $565,000 and $4.9 Million in the Same Periods a Year Ago

--Revenue, GAAP Earnings and Non-GAAP Earnings Exceeded Company's Guidance

--Announces Quarterly Cash Dividend

Keynote(R) Systems (NASDAQ:KEYN), the global leader in on-demand mobile and Internet test & measurement solutions for continuously improving the online experience, reported financial results for its fiscal fourth quarter and year ended September 30, 2009.

Umang Gupta, chairman and CEO of Keynote, said: "As the preeminent provider of test and measurement solutions for the Internet and for the mobile ecosystem, we delivered solid financial performance in a tough economy. The market continues to validate our solutions, while our new product development impresses customers. During the quarter, we again exceeded our revenue, GAAP earnings and non-GAAP earnings expectations. In fact, even with the negative impact of foreign exchange rates, we closed the year with the highest annual revenue in our company's history."

Fourth Quarter 2009 Financial Summary

Revenue for the fourth quarter of fiscal year 2009 was $19.7 million, compared to $21.1 million in the fourth quarter of fiscal year 2008, partially due to the impact of foreign currency exchange rates. Under generally accepted accounting principles (GAAP), net income for the fourth quarter of fiscal year 2009 was $537,000, or $0.04 per diluted share, compared to a net loss of $631,000, or $0.05 per share, for the fourth quarter of fiscal year 2008.

The non-GAAP net income for the fourth quarter of fiscal year 2009 was $2.2 million, or $0.15 per diluted share, compared to $1.4 million, or $0.10 per diluted share, for the fourth quarter of fiscal year 2008. The company defines non-GAAP net income as net income adjusted for provision for income taxes, stock-based compensation expense, and amortization of purchased intangibles less cash taxes from on-going operations. Non-GAAP earnings per share equals non-GAAP net income divided by the diluted weighted average shares outstanding for the period.

Fiscal 2009 Financial Summary

Revenue for fiscal year 2009 was $80.1 million, a 4% increase compared to revenue of $76.9 million for fiscal year 2008, amidst comparatively unfavorable foreign exchange rates in 2009. Net income for fiscal year 2009 was $3.3 million, or $0.23 per diluted share, compared to a net loss of $3.1 million, or $0.20 per share, for fiscal year 2008. The non-GAAP net income for the fiscal year 2009 was $10.3 million, or $0.71 per diluted share, compared to non-GAAP net income of $4.3 million, or $0.27 per diluted share, for the fiscal year 2008.

Quarterly Cash Dividend

In a separate press release issued today, the company announced the initiation of a quarterly cash dividend of $0.05 per share.

Cash Flow, EBITDA and Deferred Revenue Summary

Cash provided by operating activities for the fourth quarter of fiscal year 2009 was $1.4 million and for fiscal year 2009 was $8.8 million, which includes the $4.0 million special cash payment to the German tax authority in the second quarter 2009 for taxes associated with prior years' operations and IP migration. This compares to cash provided by operating activities of $565,000 and $4.9 million, for the fourth quarter and fiscal year 2008, respectively. Cash used for purchase of property, equipment and software totaled $858,000 for the fourth quarter of fiscal year 2009, and $3.5 million, in fiscal year 2009. In the fourth quarter of fiscal year 2008, Keynote bought a one-time source license of mobile technology for $2.6 million. Including this purchase, cash used for purchases of property, equipment and software totaled $4.4 million and $8.4 million, for the fourth quarter and the fiscal year 2008, respectively. Keynote defines free cash flow as cash flow from operations less cash used for purchases of property, equipment, software and acquired technology. The company generated free cash flow of $544,000 and $5.4 million, for the fourth quarter and fiscal year 2009, respectively. This compares to free cash flow used including the one-time source license purchase of $3.9 million and $3.5 million, for the fourth quarter and fiscal year 2008, respectively. At September 30, 2009, Keynote had $58.0 million in total cash, cash equivalents and short-term investments.

Management also believes the non-GAAP figure of earnings before interest, taxes, depreciation and amortization (EBITDA) provides a useful measure of operations. EBITDA for the fourth quarter of fiscal year 2009 was $3.1 million, or 16% of revenue, compared to $3.7 million, or 17% of revenue, for the fourth quarter of fiscal year 2008. In fiscal year 2009 EBITDA was $14.4 million, or 18% of revenue, compared to $8.8 million, or 11% of revenue, for fiscal year 2008.

Keynote's net deferred revenue was $18.8 million at September 30, 2009, compared to $19.9 million at September 30, 2008 and $21.4 million at June 30, 2009. Keynote's gross deferred revenue, defined as the sum of net deferred revenue and unpaid deferred revenue, was $22.3 million at September 30, 2009, compared to $24.7 million at September 30, 2008 and $25.6 million at June 30, 2009. The year-over-year comparison was significantly impacted by the strengthening of the U.S. dollar against the Euro.

The total shares outstanding, net of treasury shares, at September 30, 2009 was 14.5 million, compared to 14.3 million at September 30, 2008.

Operational Metrics Summary

As of September 30, 2009, Keynote's total worldwide customer base was approximately 2,800 companies. Keynote currently provides its services to 52 percent of the comScore Media Metrix's top 50 Web sites and approximately 38 percent of the Fortune 100 companies. As of September 30, 2009, Keynote measured approximately 18,000 Internet pages, as compared to 14,100 Internet pages in the same quarter a year ago.

Expectations for the First Quarter of Fiscal Year 2010

The statements in this section of this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Keynote currently expects the following for the first fiscal quarter ending December 31, 2009:

-- Total revenue is expected to be between $18.9 million and $19.4 million.

-- GAAP earnings per share are expected to be between $(0.04) and $0.00.

-- Non-GAAP earnings per share are expected to be between $0.09 and $0.12.

The above guidance was based on the following assumptions. Foreign exchange rates do not change materially. Total stock-based compensation expense and amortization of intangible assets is expected to be approximately $1.6 million. Depreciation is expected to be approximately $1.2 million. Interest income, net is expected to be approximately $150,000, assuming no material changes in interest rates and currently planned uses of cash. Cash paid for income taxes from on-going operations is expected to be approximately $100,000. Basic weighted average shares outstanding are expected to be approximately 14.5 million shares and diluted weighted average shares outstanding are expected to be approximately 14.6 million shares, assuming no additional issuances of equity or equity-related securities and significant changes in the company's stock price.

Conference Call

Keynote will host a conference call and simultaneous webcast at 2:00 pm (PST) today, November 9, 2009. To access the call in the U.S., please dial (866) 271-6228; international callers please dial (973) 638-3423, approximately 10 minutes prior to the start of the conference call. The webcast of the call will be available at the investor section of the company's web site at www.keynote.com. The replay will be available after the call by telephone by dialing (800) 642-1687 in the U.S. and (706) 645-9291 internationally; the pass code is 33968522. The webcast is at the investor section of the company's web site at www.keynote.com.

Forward-Looking Statements

This press release contains forward-looking statements that are not purely historical regarding the Company or management's intentions, hopes, beliefs, expectations and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the Company's current expectations.

Forward-looking statements in this release include, but are not limited to, forecasts concerning Keynote's expected revenue, GAAP and Non-GAAP earnings per share, and the related underlying assumptions in calculating those amounts, and other future financial results. It is important to note that actual outcomes and Keynote's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as the uncertain impact that the current global economic recession will have on Keynote's business or the businesses of current or potential customers, Keynote's ability to successfully market and sell its current services to new or existing customers, Keynote's ability to develop and introduce new services in a timely manner and customer acceptance of new services, the extent to which demand for Keynote's various services fluctuates and the extent to which revenue from other service lines can increase, the extent to which existing customers renew their subscriptions and purchase additional services, particularly enterprise customers, Keynote's ability to attract and retain new customers, Keynote's ability to operate SIGOS and its other international operations and manage related costs successfully, Keynote's ability to retain key employees, pricing pressure with respect to Keynote's services, Keynote's ability to increase sales of its other services, unforeseen expenses, competition in Keynote's markets, costs associated with any future acquisitions, the effect of acquisitions by competitors in Keynote's target markets, Keynote's ability to keep pace with changes in the mobile and Internet infrastructure as well as other technological changes, the impact of changes in foreign exchange rates, which can be significant, and the success of Keynote's international operations. Readers should also refer to the risks outlined in Keynote's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for its fiscal year ended September 30, 2008, and its quarterly reports on Form 10-Q and any current reports on Form 8-K filed during the fiscal year.

All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information available to Keynote as of the date of this press release, and Keynote assumes no obligation to update any such forward-looking statement or reasons why results might differ.

Non-GAAP Measures

This press release includes information on Non-GAAP net income, Non-GAAP earnings per share, EBITDA, free cash flow and gross deferred revenues. These measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles ("GAAP") and are not necessarily comparable to similar measures presented by other companies. Non-GAAP net income is calculated by adjusting GAAP net income (loss) for provision for income taxes less cash taxes from on-going operations, stock-based compensation expense and amortization of purchased intangibles. Non-GAAP earnings per share are calculated by dividing Non-GAAP net income by the weighted average number of diluted shares outstanding for the period. Free cash flow is defined as cash flow from operations less cash used for purchases of property, equipment, and software. Gross deferred revenue is defined as the sum of net deferred revenue and unpaid deferred revenue. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP, and because these amounts are not determined in accordance with GAAP, they should not be used exclusively in evaluating the Company's business and operations. Because the Company has made a number of acquisitions in the past, as well as because of the effect of SFAS 123(R), the Company's financial statements have changed significantly from prior periods. Accordingly, the Company believes that this non-GAAP information is useful as an additional means for investors to evaluate the Company's operating performance, when reviewed in conjunction with the Company's GAAP financial statements. Management also reviews this information as an additional means for measuring the performance of the Company. The Company compensates for these limitations by realizing that these amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating its business and operations.

About Keynote

Keynote Systems (Nasdaq "KEYN") is the global leader in on-demand test & measurement solutions for continuously improving the online experience. For over a decade, Keynote has been providing measurement data and testing capabilities that allow companies to understand and improve their customers' online and mobile experience. Keynote has four test and measurement businesses: Web performance, mobile quality, streaming & VoIP, and customer experience/UX.

Known as The Mobile and Internet Performance Authority(TM), Keynote has a market-leading infrastructure of over 3,000 measurement computers and mobile devices in over 240 locations around the world. Keynote's 2,800 customers represent top Internet and mobile companies including American Express, Dell, Disney, eBay, E*TRADE, Expedia, Microsoft, SonyEricsson, Sprint, T-Mobile, Verizon, Vodafone and YouTube.

Keynote Systems, Inc. is headquartered in San Mateo, California and can be reached at www.keynote.com or by phone in the U.S. at 1-800-KEYNOTE.

Keynote, The Internet Performance Authority, Perspective and WebEffective are registered trademarks and The Mobile and Internet Performance Authority, True Experience and FlexUse are trademarks of Keynote Systems, Inc. Other trademarks are the property of their respective owners. (C) 2009 Keynote Systems, Inc.

Keynote Systems, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                 Three months ended                        Year ended
                                                 Sep 30        Jun 30        Sep 30        Sep 30        Sep 30
                                                 2009          2009          2008          2009          2008
Net revenue:
Subscription services                            $  11,328     $  11,455     $  11,909     $  45,597     $  45,314
Ratable licenses                                    6,275         6,390         6,787         24,623        21,820
Professional services                               2,134         2,324         2,360         9,887         9,774
Total revenue, net                                  19,737        20,169        21,056        80,107        76,908
Costs and expenses:
Costs of revenue:
Direct costs of subscription services               1,982         2,098         1,753         8,655         8,324
Direct costs of ratable licenses                    1,528         1,424         2,318         6,079         6,558
Direct costs of professional services               1,492         1,293         1,752         5,958         7,113
Operations                                          1,911         1,943         2,279         8,264         8,576
Development                                         3,049         2,863         3,083         12,186        12,608
Amortization of intangible assets - software        294           290           303           1,160         1,000
Total costs of revenue                              10,256        9,911         11,488        42,302        44,179
Sales and marketing                                 5,701         5,665         6,712         23,863        25,705
General and administrative                          2,615         2,346         2,320         10,332        10,142
Excess occupancy income, net                        (291   )      (258   )      (323   )      (1,020 )      (1,210 )
Amortization of intangible assets - other           260           259           501           1,050         2,148
Lease termination costs                             635           -             -             635           -
Total costs and expenses                            19,176        17,923        20,698        77,162        80,964
Income (loss) from operations                       561           2,246         358           2,945         (4,056 )
Interest income and other, net                      184           104           (384   )      1,331         1,990
Income (loss) before provision for income taxes     745           2,350         (26    )      4,276         (2,066 )
Provision for income taxes                          (208   )      (258   )      (605   )      (1,019 )      (1,034 )
Net income (loss)                                $  537        $  2,092      $  (631   )   $  3,257      $  (3,100 )
Net income (loss) per share:
Basic                                            $  0.04       $  0.15       $  (0.05  )   $  0.23       $  (0.20  )
Diluted                                          $  0.04       $  0.15       $  (0.05  )   $  0.23       $  (0.20  )
Weighted average common shares outstanding:
Basic                                               14,468        14,378        13,980        14,323        15,522
Diluted                                             14,628        14,403        13,980        14,394        15,522

Keynote Systems, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                   September 30, 2009 September 30, 2008
Assets
Current assets:
Cash, cash equivalents and short-term investments  $      57,968      $      49,331
Accounts receivable, net                                  6,403              7,316
Prepaids, deferred costs and other current assets         3,517              2,909
Inventories                                               1,222              1,081
Deferred tax assets                                       2,913              1,042
Total current assets                                      72,023             61,679
Deferred costs and other long-term assets                 3,024              2,788
Property and equipment, net                               34,778             36,405
Goodwill                                                  66,078             64,396
Identifiable intangible assets, net                       6,255              8,430
Deferred tax assets                                       61                 2,146
Total assets                                       $      182,219     $      175,844
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                   $      1,147       $      2,505
Accrued expenses                                          8,450              12,767
Current portion of capital lease obligation               16                 14
Notes payable                                             -                  256
Deferred revenue                                          17,661             19,029
Total current liabilities                                 27,274             34,571
Long-term portion of capital lease obligation             -                  17
Deferred rent and other long term liabilities             3,344              2,605
Long-term deferred revenue                                1,167              904
Long-term deferred tax liability                          414                236
Total liabilities                                         32,199             38,333
Stockholders' equity:
Common stock                                              14                 14
Additional paid-in capital                                282,653            275,316
Accumulated deficit                                       (139,950 )         (143,207 )
Accumulated other comprehensive income                    7,303              5,388
Total stockholders' equity                                150,020            137,511
Total liabilities and stockholders' equity         $      182,219     $      175,844

Keynote Systems, Inc. and Subsidiaries
GAAP TO NON-GAAP RECONCILIATION
(In thousands, except per share data)
(Unaudited)
                                                       Three months ended                              Year ended
                                                       Sep 30          Jun 30          Sep 30          Sep 30          Sep 30
                                                       2009            2009            2008            2009            2008
Revenue categories:
Internet Subscriptions                                 $   9,182       $   9,403       $   9,933       $   37,582      $   38,432
Internet Engagements                                       2,134           2,324           2,360           9,887           9,774
Subtotal Internet Revenue                                  11,316          11,727          12,293          47,469          48,206
Mobile Subscriptions                                       2,146           2,052           1,976           8,015           6,882
Mobile Ratable Licenses                                    6,275           6,390           6,787           24,623          21,820
Subtotal Mobile Revenue                                    8,421           8,442           8,763           32,638          28,702
Total Revenue, Net                                     $   19,737      $   20,169      $   21,056      $   80,107      $   76,908
Non-GAAP net income and income per share:
GAAP net income (loss)                                 $   537         $   2,092       $   (631   )    $   3,257       $   (3,100 )
Provision for income taxes                                 208             258             605             1,019           1,034
Stock-based compensation *                                 992             763             1,171           4,392           4,557
Amortization of intangible assets - other                  260             259             501             1,050           2,148
Amortization of intangible assets - software               294             290             303             1,160           1,000
Non-GAAP income before income tax                          2,291           3,662           1,949           10,878          5,639
Cash taxes from on-going operations                        (82    )        (76    )        (557   )        (601   )        (1,327 )
Non-GAAP net income                                    $   2,209       $   3,586       $   1,392       $   10,277      $   4,312
Weighted average common shares outstanding (diluted):      14,628          14,403          14,621          14,394          16,098
Non-GAAP income per share                              $   0.15        $   0.25        $   0.10        $   0.71        $   0.27
EBITDA:
GAAP net income (loss)                                     537         $   2,092       $   (631   )    $   3,257       $   (3,100 )
Provision for income taxes                                 208             258             605             1,019           1,034
Interest income and other, net                             (184   )        (104   )        384             (1,331 )        (1,990 )
Stock-based compensation *                                 992             763             1,171           4,392           4,557
Amortization of intangible assets - other                  260             259             501             1,050           2,148
Amortization of intangible assets - software               294             290             303             1,160           1,000
Depreciation                                               990             1,363           1,331           4,854           5,139
EBITDA                                                     3,097       $   4,921       $   3,664       $   14,401      $   8,788
*Stock-based compensation by category:
Direct costs of ratable licenses                           27          $   27          $   63          $   78          $   246
Direct costs of professional services                      102             65              115             494             462
Operations                                                 130             91              163             554             644
Development                                                224             172             252             969             993
Sales and marketing                                        365             285             399             1,580           1,532
General and administrative                                 144             123             179             717             680
                                                           992         $   763         $   1,171       $   4,392       $   4,557
The year-ended September 30, 2009 stock-based compensation expense
includes a $601,000 non-recurring charge associated with the return
of stock options granted to the CEO.

Keynote Systems, Inc. and Subsidiaries
REVENUE DETAIL
(In thousands)
(Unaudited)
                           Three months ended                               Year ended
                           Dec 31      March 31     June 30     Sep 30      Sep 30
FY 2009
Internet Subscriptions     $   9,664   $    9,333   $   9,403   $   9,182   $     37,582
Internet Engagements           3,121        2,308       2,324       2,134         9,887
Subtotal Internet Revenue      12,785       11,641      11,727      11,316        47,469
Mobile Subscriptions           1,809        2,008       2,052       2,146         8,015
Mobile Ratable Licenses        6,043        5,915       6,390       6,275         24,623
Subtotal Mobile Revenue        7,852        7,923       8,442       8,421         32,638
Total Revenue, Net         $   20,637  $    19,564  $   20,169  $   19,737  $     80,107
FY 2008
Internet Subscriptions     $   9,532   $    9,438   $   9,529   $   9,933   $     38,432
Internet Engagements           2,846        1,937       2,631       2,360         9,774
Subtotal Internet Revenue      12,378       11,375      12,160      12,293        48,206
Mobile Subscriptions           1,340        1,654       1,912       1,976         6,882
Mobile Ratable Licenses        4,002        4,605       6,426       6,787         21,820
Subtotal Mobile Revenue        5,342        6,259       8,338       8,763         28,702
Total Revenue, Net         $   17,720  $    17,634  $   20,498  $   21,056  $     76,908
FY 2007
Internet Subscriptions     $   9,510   $    9,620   $   9,722   $   9,461   $     38,313
Internet Engagements           3,102        2,778       3,064       2,929         11,873
Subtotal Internet Revenue      12,612       12,398      12,786      12,390        50,186
Mobile Subscriptions           997          1,113       1,158       1,080         4,348
Mobile Ratable Licenses        2,206        3,203       3,443       4,368         13,220
Subtotal Mobile Revenue        3,203        4,316       4,601       5,448         17,568
Total Revenue, Net         $   15,815  $    16,714  $   17,387  $   17,838  $     67,754
FY 2006
Internet Subscriptions     $   9,281   $    9,459   $   9,499   $   9,743   $     37,982
Internet Engagements           3,896        2,792       2,419       3,034         12,141
Subtotal Internet Revenue      13,177       12,251      11,918      12,777        50,123
Mobile Subscriptions           539          488         855         962           2,844
Mobile Ratable Licenses        -            -           1,094       1,447         2,541
Subtotal Mobile Revenue        539          488         1,949       2,409         5,385
Total Revenue, Net         $   13,716  $    12,739  $   13,867  $   15,186  $     55,508

Keynote Systems, Inc. and Subsidiaries
CASH FLOW FROM OPERATING ACTIVITIES AND FREE CASH FLOW
(In thousands)
(Unaudited)
                           Three months ended                                              Year ended
                           Dec 31          March 31        June 30         Sept 30         Sept 30
FY 2009
Total Revenue              $   20,637      $   19,564      $   20,169      $   19,737      $   80,107
Cash Flow from Operations  $   2,020       $   1,249       $   4,151       $   1,402       $   8,822
% of Revenue                   10     %        6      %        21     %        7      %        11     %
Purchase of PP&E           $   661         $   736         $   1,199       $   858         $   3,454
Free Cash Flow *           $   1,359       $   513         $   2,952       $   544         $   5,368
% of Revenue                   7      %        3      %        15     %        3      %        7      %
FY 2008
Total Revenue              $   17,720      $   17,634      $   20,498      $   21,056      $   76,908
Cash Flow from Operations  $   330         $   2,527       $   1,522       $   565         $   4,944
% of Revenue                   2      %        14     %        7      %        3      %        6      %
Purchase of PP&E           $   1,351       $   1,034       $   1,602       $   4,435       $   8,422
Free Cash Flow *           $   (1,021 )    $   1,493       $   (80    )    $   (3,870 )    $   (3,478 )
% of Revenue                   -6     %        8      %        0      %        -18    %        -5     %
FY 2007
Total Revenue              $   15,815      $   16,714      $   17,387      $   17,838      $   67,754
Cash Flow from Operations  $   4,680       $   6,847       $   5,883       $   2,970       $   20,380
% of Revenue                   30     %        41     %        34     %        17     %        30     %
Purchase of PP&E           $   704         $   1,383       $   2,073       $   1,380       $   5,540
Free Cash Flow *           $   3,976       $   5,464       $   3,810       $   1,590       $   14,840
% of Revenue                   25     %        33     %        22     %        9      %        22     %
FY 2006
Total Revenue              $   13,716      $   12,739      $   13,867      $   15,186      $   55,508
Cash Flow from Operations  $   3,505       $   2,941       $   2,938       $   1,231       $   10,615
% of Revenue                   26     %        23     %        21     %        8      %        19     %
Purchase of PP&E           $   337         $   1,055       $   792         $   874         $   3,058
Free Cash Flow *           $   3,168       $   1,886       $   2,146       $   357         $   7,557
% of Revenue                   23     %        15     %        15     %        2      %        14     %
* Keynote defines free cash flow as cash flow from operations less
cash used for purchases of property, equipment, software and
acquired technology.

Keynote Systems, Inc. and Subsidiaries
DEFERRED REVENUE
(In thousands)
(Unaudited)
                                   September 30, 2009   June 30, 2009  September 30, 2008
Deferred revenue, net
Domestic                           $         5,880      $      6,296   $         5,982
International                                12,948            15,123            13,951
Total                              $         18,828     $      21,419  $         19,933
Add back: unpaid deferred revenue
Domestic                                     1,665      $      1,400   $         2,425
International                                1,810             2,819             2,331
Total                              $         3,475      $      4,219   $         4,756
Deferred revenue, gross
Domestic                           $         7,545      $      7,696   $         8,407
International                                14,758            17,942            16,282
Total                              $         22,303     $      25,638  $         24,689

SOURCE: Keynote Systems

Keynote Systems, Inc. 
Dan Berkowitz, 650-403-3305 (Public Relations) 
dberkowitz@keynote.com 
or 
Kirsten Chapman, 415-433-3777 (Investor Relations) 
kchapman@lhai.com